Japan’s Nikkei Jumps 2 pct on Exporters, Recovers From Cyprus Blow

Japan’s Nikkei average rebounded 2 percent on Tuesday, regaining some ground lost in the previous session as fears receded that a controversial bailout proposal for Cyprus could reignite the euro zone crisis.

Analysts said that the disruption to the Japanese market from the unusual bailout plan for Cyprus seems to have run its course, although the Japanese equities market is prone to volatility because it is vulnerable to a rise in the yen when global market uncertainty increases.

“It looks like the bailout issue will be contained in Cyprus itself and it probably won’t spread to the euro zone. As the Japanese market was rallying lately, Monday’s selling served as a good opportunity for correction,” said Yutaka Miura, a senior technical analyst at Mizuho Securities. “But European debt issues will likely take years to be resolved, and we need to be prepared for a sell-off like this again as the Japanese market could easily get hit by a strong yen when investors buy the yen.”

The Nikkei added 247.60 points to 12,468.23 after sliding 2.7 percent on Monday, its biggest one-day drop in 10 months. The index is just 0.74 percent away from a 4-1/2 year high of 12,560.95 marked last Friday.

Ahead of a parliamentary vote in Cyprus that will either secure the island’s financial rescue or threaten default, euro zone ministers have urged Cyprus to let smaller savers escape a controversial levy on bank deposits.

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Euro Falls Toward 4-Month Low Versus Dollar; Drops Against Yen

The euro slid toward the lowest in almost four months against the dollar after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc.

The 17-nation currency fell for a fourth day versus the yen as an official familiar with the matter said European policy makers in Cyprus discussed further capital controls and extending a bank holiday through to the end of the week. The yen and dollar rose against most major peers as investors sought havens on concern Europe’s crisis may slide out of control.

“It’s an impasse with the Cyprus parliament rejecting the proposals from the eurogroup, and they will have to engage in further negotiations,” said Hans Kunnen, the Sydney-based chief economist at St. George Bank Ltd. “This just adds to the weight against the euro.”

The euro fell 0.1 percent to $1.2872 as of 9:25 a.m. in Singapore from $1.2882 in New York yesterday, when it touched $1.2844, the weakest since Nov. 22. The shared currency declined 0.3 percent to 122.18 yen and traded little changed at 1.2196 Swiss francs following a 0.5 percent drop yesterday. The dollar slid 0.3 percent to 94.92 yen. 

Japanese financial markets are closed today for a national holiday.

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Investors Focus This Week Asia focused on Japan Trade Data

Focus on Asian investors this week will be focused on Japan's trade data which will be a test of the new Japanese government policy, other than that attention will be focused on earnings reports China's energy giant, CNOOC and Sinopec.

Japan's trade data will provide additional evidence whether Japanese exporters benefit from PM Shinzo Abe added that maintaining the weakening Japanese yen. In addition, the investors will also see Japan's trade report as a measure of global demand.

Japanese Parliament finally approved the new management at the Bank of Japan and the government took measures to support monetary policy in an effort to push back the third largest economy in the world.

The upper house gave the green light to Haruhiko Kuroda as the Governor of the Bank of Japan, a former head of the Asian Development Bank (ADB) to undertake aggressive measures of monetary easing after its predecessor failed to change the fate of the Japanese economy.

The Star Online Friday (03/15/2013) that includes news, Japanese House of Representatives also approved Kikuo Iwata and Hiroshi Nakaso as deputy governor accompanied Kuroda, unanimously came despite warnings from the opposition who oppose Iwata.

After receiving approval from the parliament, the new management team of Bank of Japan will take their position next week to discuss the focus of their first policy next month.

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BoJ Governor Candidate Says No Need to Change Target Inflation

 
Candidate for Governor of the Bank of Japan (Bank of Japan/BoJ), Haruhiko Kuroda said the government does not need to change the inflation target of 2 percent or setting a target for consumer prices, excluding food and energy.

"Target price BoJ is currently focused on core prices, which exclude fresh food and energy costs," said the man aged 68, who decided to resign as president of the Asian Development Bank (ADB), as reported by Reuters on Monday (3/11/2013).

While the core of the Japanese consumer price excluding food and energy, similar to the size of the core consumer price used the United States.

As is known, Kuroda is a proponent of aggressive monetary easing. He often spoke to lawmakers in the upper house should be the policy of the central bank. Prime Minister Shinzo Abe hoped, a former top diplomat was doing radical easing now in control of the BoJ to end a nearly two-decade deflationary Japanese twist.

Meanwhile, Japan's machinery orders fell 13 percent in January 2013, the largest decline in eight months. This result is a signal to the upper limit of the company's investment business encourages Prime Minister Shinzo Abe's economic revival.

Japan returned to growth in the fourth quarter as the yen began to slide, strengthening Abe campaign to end 15 years of deflation and revive the third largest economy in the world.

"Going forward, we expect accelerating consumption, housing and public investment," Devalier said, as quoted by Bloomberg, on Monday (11/03/2013).

"But given the trend of exports is weak, it will take more time before we see a business environment driven by pelamahan yen and increased optimism producers translates into strong corporate investment," he added.

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